March 25 (Bloomberg) -- AstraZeneca Plc, the U.K.’s second-biggest drugmaker, agreed to settle a lawsuit against generic manufacturer Actavis Inc. that alleged violation of the patent on the company’s best-selling Crestor cholesterol treatment.
The agreement allows Actavis and partner Egis Nyrt. to begin selling a copy of Crestor on May 2, 2016, London-based AstraZeneca said in a statement today. Actavis will pay AstraZeneca a fee of 39 percent of net sales until the end of pediatric exclusivity on July 8, 2016. Crestor had sales of $6.25 billion last year.
AstraZeneca won an appeals-court ruling in December that blocked generic versions of the drug in the U.S. until July 2016. Shionogi & Co. is also part of the settlement agreement, the complete terms of which were not disclosed.
“Clearly it removes uncertainty for Astra though we don’t see how much they paid to obtain this settlement, so it is difficult to assess the economic value,” Fabian Wenner, an analyst with Kepler Capital Markets SA who rates the share hold, said in an e-mail. “Strategically, this helps Astra to focus on restructuring and set the organization at ease.”
AstraZeneca rose 0.6 percent to 3,256.50 pence at the close of trading today in London, giving the company a market value of 40.7 billion pounds ($61.8 billion).
The generic product still must be approved by the U.S. Food and Drug Administration, and Actavis, which changed its name from Watson in November, has made no decision regarding its release, the company said in a statement.
“This agreement ensures that consumers will benefit from an earlier launch of a rosuvastatin calcium product and eliminates ongoing litigation and uncertainty of marketplace acceptance of a non-generically substitutable product if Actavis had proceeded to launch the alternate product,” Paul Bisaro, president and chief executive officer of Actavis, said in the statement.
AstraZeneca sued Watson and Egis, which was to manufacture the product, in October 2010 in the U.S. District Court in Delaware, claiming Watson’s generic would infringe on its substance patent for Crestor. Watson had proposed in its new drug application to make a new salt form of Crestor. Watson and Egis filed counter-claims seeking to invalidate the substance patent. A trial was held between Dec. 12 and 19 and a ruling was expected shortly.
The U.S. Supreme Court is hearing arguments today about whether such “pay for delay” agreements between pharmaceutical companies and generic drugmakers should be allowed. The Federal Trade Commission says the deals are anti-competitive and prevent consumers from getting lower-priced drugs while drugmakers say the agreements resolve patent issues and allow for generic competition sooner.
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